If you had $100 million and had to give it to one oil and gas man to try and turn it into something bigger, Mike Rose may be your best bet. Prior to founding Tourmaline Oil in 2008, Rose successfully built and sold Berkeley Petroleum to Anadarko Petroleum for $1.6 billion, and sold Duvernay Oil to Shell for $5.9 billion, making shareholders scads of money along the way.
Those two companies were huge successes. What he has done this time around at Tourmaline is a bit harder to wrap one’s head around. From a standing start in 2008, he will have turned Tourmaline into the second-largest natural gas producer in the entire Western Canadian Sedimentary Basin by 2016.
With Tourmaline, Rose and his team (the same group from Duvernay Oil) have focused on the Deep Basin in Alberta. In just seven years, Tourmaline has assembled the largest land position (1.69 million acres), delineated the largest drilling inventory (8,833 locations) and become the single largest producer in the region.
The wells that Tourmaline is drilling into the Deep Basin are absolute monsters. In any list of the 10 best Alberta natural gas wells drilled each month, you can expect to find Tourmaline holding the majority of the spots.
Like all the great entrepreneurs who repeatedly create value for shareholders, Rose has done it by focusing on low-cost assets and keeping a pristine balance sheet. It doesn’t hurt that his reputation keeps Tourmaline’s share price at a premium valuation, offering all kinds of opportunities to use those shares to make lucrative acquisitions.
The biggest challenge for Rose—other than stubbornly low gas prices—is that Tourmaline got so big, so fast, that very few companies have the firepower to acquire it. That complicates the usual Mike Rose exit strategy. The best hope on that front for Tourmaline would be a West Coast LNG player needing to lock down significant feedstock. That might mean shareholders will be forced to enjoy this ride for quite a while longer.
TOURMALINE CEO MIKE ROSE